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Dee Ltd has the following cost situation Debt: 2 0 0 0 bonds were issued 5 years ago at a coupon rate of 1 5
Dee Ltd has the following cost situation
Debt: bonds were issued years ago at a coupon rate of pa They had a year erm and $ face value. They are now selling to yield kd but interest is paid semi annually.
Preferred stock: shares of pref shares are outstanding each of which we pay an annual dividend of on face value of $ The are now selling to yield pa
Equity: Dee Ltd has ordinary shares outstanding currently selling at $share The estimated cost of equity is pa whilst corporate tax is
Required
a Determine both the book value and market values
b The business cost components
c Calculate Dee Ltds WACC using market values
d Compute the capital gearing of this company assuming that the preferred stock is cumulative in nature and comment given that the industry's average gearing is
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